It’s no secret that computer and network security breaches are not only increasing, but also becoming increasingly devastating to companies and their customers. Over the past five years, the cost of defending electronic assets from hackers has risen about 10% annually, and this year’s estimated cyber-security price tag of more than $75 billion. That bodes very well indeed for shares of the right information security companies.
Although IT security companies probably will never develop a single silver bullet that eliminates every threat, they are the sharp point of the spear in the war on hackers. And the companies best-positioned to deliver the most robust solutions will be rewarded with higher earnings and rising share prices. Here are three companies that are gearing up to profit from the rising threat of malicious attacks
Symantec (Nasdaq:SYMC). The company has a market cap of $14.92 billion and at $19.75, is trading more than 64% above its 52-week low of $12.04 last August. The company has a price to earnings-growth (PEG) ratio of 1.30, indicating that the stock is fairly valued. Symantec also is solid in its debt position, with total cash of $2.96 billion compared to total debt of just $2.58 billion.
The Edge: Symantec adds behavioral analysis to traditional signature-based virus databases to identify the enormous volume of sophisticated attacks more quickly. The company also is focusing on robust security for so-called cloud computing environments, which have very different needs than traditional physical server networks.
CheckPoint (Nasdaq:CHKP). Checkpoint has a market cap of $12.07 billion and is trading more than 98% above its 52-week low of $29.02 last July. The company has a PEG ratio of 1.93, suggesting the stock is a little on the expensive side and could offer more value after a pullback. The company has a great cash position: $1.08 billion in cash with no debt.
The Edge: CheckPoint’s 3D Security vision takes a holistic approach to data and network protection, from developing security policies to training people to consolidation of all layers of security: network, data, application, content and user.
ManTech (Nasdaq:MANT). ManTech has a market cap of $1.65 billion and at around $45, the stock is trading 30% over its 52-week low of $34.69 last August. ManTech is one of the few companies in this sector to offer a dividend – the yield is 1.90%. The stock’s PEG ratio of 1.46 also is slightly rich, and the company carries more debt than some of its competitors – for its nearly $73 million cash, it has $200 million in debt.
The Edge: ManTec focuses on providing robust IT security solutions for the federal government, particularly in the national security arena, where it has contracts with the Department of Defense, the Department of Justice and other agencies.
As of this writing, Susan J. Aluise did not hold a position in any of the stocks named here.
